VF Corporation (VFC)

The liquidity ratios of VF Corporation over the past five years indicate a fluctuating trend in the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to cover its current liabilities with its current assets, has decreased from 2.17 in 2021 to 1.22 in 2024. While a current ratio above 1 signifies that the company has sufficient current assets to cover its current liabilities, the downward trend in this ratio may raise concerns about VF Corporation's short-term liquidity position.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown a declining trend, decreasing from 1.23 in 2021 to 0.56 in 2024. This indicates that VF Corporation may have limited ability to cover its immediate obligations with its most liquid assets.

Furthermore, the cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has decreased significantly from 0.64 in 2021 to 0.20 in 2024. A decreasing cash ratio suggests that VF Corporation's cash reserves may be insufficient to cover its short-term obligations.

Overall, the decreasing trend in VF Corporation's liquidity ratios over the past five years raises concerns about the company's short-term solvency and ability to meet its immediate financial obligations. Investors and stakeholders should closely monitor these ratios to assess the company's liquidity position and financial health.

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Additional liquidity measure

The cash conversion cycle for VF Corporation has shown fluctuations over the past five years. In the most recent fiscal year ending on March 31, 2024, the cash conversion cycle decreased to 78.94 days from 96.61 days in the previous year. This indicates that VF Corporation was able to convert its investments in inventory into cash more efficiently in 2024 compared to 2023.

Looking at the trend over the five-year period, the cash conversion cycle was relatively stable between 2020 and 2022, hovering around the mid-70s to high 70s range. However, there was a slight increase in 2023 before the improvement in 2024 as mentioned earlier.

The cash conversion cycle is an important metric as it reflects the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales. A lower cash conversion cycle generally indicates more efficient operations and better liquidity management.

Overall, VF Corporation's fluctuating cash conversion cycle over the past five years suggests varying levels of efficiency in managing its working capital and converting investments into cash. The recent improvement in 2024 is a positive sign, indicating potential enhancements in the company's operational efficiency and cash flow management.